DraftKings Settles NFLPA Lawsuit Over NFT Pay Dispute

DraftKings, the popular US sports betting platform, has reached a settlement with the National Football League Players Association (NFLPA) over a dispute regarding payments for the use of NFL player likenesses in non-fungible tokens (NFTs). This lawsuit had been filed after DraftKings ceased payments for NFTs featuring NFL players, prompting legal action from the NFLPA.

In a joint statement on January 27, DraftKings and the NFLPA informed New York federal Judge Analisa Torres that they had mediated the dispute and reached a settlement in principle. The settlement is still pending a final agreement, and the parties have requested a 60-day stay, extending the deadline until March 28 to finalize the terms. The specific details of the settlement have not been disclosed at this time.

Judge Torres, who is known in the crypto world for presiding over the Securities and Exchange Commission’s lawsuit against Ripple, will need to approve the final settlement.

The Dispute

The legal saga began in 2021 when DraftKings partnered with the NFLPA to create collectible NFTs based on NFL players. These NFTs were integrated into a fantasy sports game called Reignmakers, where users could trade the digital collectibles.

However, in July 2022, DraftKings shut down its NFT marketplace, halting payments to the NFLPA. The company argued that it had the right to terminate the contract after a federal judge ruled that the NFTs might qualify as securities under the Securities Act and Exchange Act. This ruling led DraftKings to stop its payments to the NFLPA.

In response, the NFLPA filed a lawsuit in August, seeking around $65 million in damages. Though the exact amount of the damages remains redacted in court filings, it is clear that the association was looking to recover substantial compensation for the halted payments.

The NFLPA also alleged that DraftKings had threatened to stop offering NFTs in 2023, but the two parties later agreed to restructure their contract. This legal battle and the resulting settlement highlight the challenges surrounding the intersection of sports, NFTs, and the evolving regulatory landscape around digital assets.

Proposed Settlement and NFL’s Super Bowl Timing

The settlement comes at an interesting time, just weeks before the 2025 Super Bowl, scheduled for February 9 in New Orleans, Louisiana. Traditionally, the Super Bowl has been a high-profile venue for cryptocurrency ads, with companies like Coinbase, Crypto.com, and FTX buying significant advertising space. However, following the collapse of FTX in November 2022, the 2024 Super Bowl saw no crypto-related advertisements.

While the NFT market has seen some declines from its peak, the broader digital asset landscape continues to evolve. In 2024, NFT sales grew by 2.3% year-on-year, reaching $8.9 billion, although this figure remains far below the $23.7 billion posted in 2022, according to data from CryptoSlam.

Conclusion

The settlement between DraftKings and the NFLPA marks a significant resolution to a high-profile dispute in the evolving world of NFTs and sports partnerships. As both parties work to finalize the terms of their agreement, the settlement’s outcome could have broader implications for how digital assets, particularly NFTs, are integrated into the sports and entertainment industries.

With the NFL Super Bowl just around the corner, the settlement highlights ongoing challenges in the digital asset space, including the regulation of NFTs, which continue to intersect with traditional sports marketing and fandom. The future of NFTs and crypto-related advertisements at major sporting events remains uncertain, but DraftKings and the NFLPA’s resolution signals an important step toward clarity and potential future collaborations.